Debate over mandated minimums anticipated

Krystine Lumanta from smsmagazine.com.au writes: The minimum balance or starting point for SMSF establishment has been flagged as an area that will once again come under scrutiny as the wider super industry undergoes an assessment into its efficiency and competitiveness.

During a panel discussion on policy certainty at the SMSF Association 2017 National Conference in Melbourne last week, association head of policy Jordan George said the Productivity Commission’s study into the super system could contain significant findings in relation to the SMSF sector.

“In the early discussions we’ve had with the commission, their focus has been on cost and returns for the SMSF sector and their idea is, put simply, this review of competitiveness and efficiency [wants to determine whether] the super system is meeting members’ needs,” George noted.

“So we, in the SMSF sector, are going to see a renewed focus on funds with low balances and the costs of those funds, and also the returns of those funds.

“And I think the general idea of mandated minimums and so forth are going to be part of a debate on the horizon again.”

He said the association was working with the commission to ensure the government body understood that assessing the performance of the SMSF sector should not be based on cost and returns alone.

“If you’re an Australian Prudential Regulation Authority fund member, it’s fair enough that someone else is looking after your money, so costs and returns are probably going to be two of the most important things,” he said.

“But in the SMSF sector people are making choices and if they are aware of the choices they make, they understand the implications in terms of the costs that they do pay and the returns they seek, so therefore we think there needs to be a broader discussion around that.

“It’s not just taking the final number of costs and returns and that’s it, you make a judgment on that.

“It is definitely much more complex and we’re going to be working with the {commission] with that idea going forward.”

The results of the commission’s report and any policy recommendations off the findings were expected to be delivered around 2019, he added.

“There’s still quite a bit of work to go, starting in the second half of this year, so the idea that policy is set, I don’t think we’re quite there yet,” he said.

“Maybe with the tax arrangements we do, but in terms of the shape of the system, the Productivity Commission is going to have a huge influence over that in the next few years.”